AP Macroeconomics Unit 6

The U.S. can produce 10 ipads or 20 phones.  China can produce 20 ipads or 30 phones. Who should produce what?

• U.S.-ipads
  China- phones
• U.S. phones
  China- ipads
• both should produce ipads
• they should not specialize

The US can produce 1 ton of sugar using 4 acres of land, or they can produce 1 ton of avocados using 6 acres. 
Ecuador can produce 1 ton of sugar using 5 acres of land or 1 ton of avocados using 4 acres. 
Which country should produce avocados? 

• Ecuador
• US
• not enough information

The US can produce 200 airplanes or 400 trucks. Japan can produce 300 trucks or 100 airplanes. 
Which country has the absolute advantage in producing airplanes? 

• Japan
• US

Country X can manufacture a particular product better and at a lower cost than country Y can.
What conclusion can be drawn from this situation?

• Country X has solved the problem of scarcity.
• Country X should discontinue making that product.
• Country Y should try to produce the same product. 
• Country X should sell that product to Country Y.

Suppose that in one week Sam can knit 5 sweaters or make 4 blankets and Rob can knit 10 sweaters or make 6 blankets. Which of the following is true?

• Sam has an absolute advantage in making blankets
• Sam has neither a comparative nor an absolute advantage in knitting sweaters or making blankets
• Sam has a comparative advantage in making blankets
• Sam has a comparative advantage in knitting sweaters

The diagram shows the production possibilities curve for Country Y. Which of the following statements is true?

• If Country Y is producing at point C, it is using all its resources efficiently
• The opportunity cost of producing more machines is constant
• Country Y cannot produce at point E
• The most efficient point of production is point D

The simplified production possibilities curves for country A and B are shown. Which one of the following statements is correct?

• Country A has the comparative advantage in both goods
• Country A has the comparative advantage in chairs & Country B has the comparative advantage in shirts
• Country B has the absolute advantage in shirts only
• Country A has the comparative advantage in shirts & Country B has the comparative advantage in chairs

Improvements in technology for producing all goods must result in:

• An inward shift in the production possibilities curve 
• A flatter production possibilities curve 
• An outward shift in the production possibilities curve 
• A steeper production possibilities curve 

If nations specialize according to their comparative advantage and engage in trade with each other, each nation can:

• Consume outside its production possibilities curve 
• Produce outside its production possibilities curve 
• Shift its production possibilities curve to the right 
• Produce more of all goods 

Based on the table provided, which one of the following statements is correct?

• Japan has the absolute advantage in producing cars
• Japan has the comparative advantage in producing cars
• The United States has the absolute advantage in producing both cars and computers
• The opportunity cost of producing a car in Japan is 1/2 a computer